Too generous? RBS trumpets hefty share of business lending

RBS disclosed it now has between a 40 to 50 per cent market share of new business lending under its Project Merlin lending agreements with the UK government.

The deal agreed in February with the government also included Barclays, HSBC, Lloyds Banking Group and Santander pledging to lend at least 190 billion, of which 76bn was for small and medium-sized enterprises (SMEs) this year.

According to provisional figures released yesterday by the British Bankers' Association, the five banks delivered 100.4bn in gross new lending to UK businesses during the first six months of the year, including 37.4bn to SMEs.

RBS revealed that its slice of this new lending to business was 44.2bn. This comprised 16.7bn of gross new loans and facilities to medium-sized and large corporates, and 15.5bn of new loans and facilities to SMEs.

In addition, the bank said it had made 7.2bn of mid-corporate overdraft renewals, and 4.8bn of SME overdraft renewals.

The bank said: "RBS continues to make available lending facilities considerably in excess of its market share of UK corporate and SME relationships."

Stephen Hester, chief executive, said he was pleased to be backing UK business but was also slightly concerned if this sort of market share of new lending meant "RBS might be lending too much".

However, the Federation of Small Businesses (FSB) was cool about the new industry lending figures. FSB chairman John Walker said: "While it looks like the banks are on course to meet their full-year lending commitment, targets do not address the underlying problems where only a handful of banks control the majority of the market. With global economic fears, it should not be about meeting targets but about helping businesses start up, grow and invest."